What is FatFI?

FatFI refers to a level of financial independence that allows for significantly increased spending beyond the basic level needed to cover essential living expenses. It is part of the broader continuum of financial independence, acknowledging that people may have different lifestyle aspirations after achieving their basic financial independence number.

In FatFI, individuals calculate their financial independence number (the amount of money needed to be considered financially independent) based on a desired lifestyle that includes higher spending. This could mean planning for expenses like luxury travel, high-end experiences, or simply a more comfortable day-to-day living standard. Often, this involves setting a financial target that is 30% or more above the basic requirements.

For example, one way to calculate FatFI might include adding a buffer of 20-25% to your financial independence number or factoring ongoing costs like a mortgage into your calculations. This approach provides a cushion, allowing for a lifestyle that isn't limited by stricter budget constraints typical of leaner financial independence plans 1.

Ultimately, FatFI represents a personalized approach to financial independence, one that considers not just freedom from work but the ability to enjoy a more affluent lifestyle while maintaining financial security.